The 20,000% Tax Increase

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Having
smoked the last cigar in my humidor recently, I decided to stop
at my local tobacco shop — Jon's Pipe Shop — and pick up a cigar.
I settled on Hoyo
de Monterrey's Excalibur No. III
and I walked out of the store
six dollars poorer. While in the city of Champaign, IL, I conversed
with the owner and employees about several different tobacco-related
topics — including smoking bans and tax increases. It seems smokers
just can't get a break.

Now,
as a brief background, the city of Champaign has been jerked around
as of late by politicians on the issue of tobacco. Last year, the
city council voted to ban smoking in bars and restaurants
, with
the ban taking effect in January of this year. In May of this year,
after two new anti-smoking ban candidates were elected to the city
council, the
ban was repealed
. But alas, Governor Blagojevich, our scandal-ridden,
fearless leader, and the Illinois legislature, the two of which
are almost always at odds, incidentally, came together to do what
politicians do best — expand the role of government. So, despite
the brief reprise that Champaign has gotten from needless paternalism
(is there any other kind?), come next January bars
all across Illinois will have to put up no-smoking signs
. The
only point to my visiting bars was to smoke a cigar with friends,
given that a glass of scotch tastes just as good at home as at the
bars and costs significantly less. The bars have, through no fault
of their own, lost my business.

Now,
if that wasn't bad enough, there is a similarly odious bill brewing
in the United States that would mandate a 20,000+%
increase in the tax on cigars
as well as a less exorbitant increase
in the tax on cigarettes. (For those who have not heard about this,
you might think the percentage listed above may be a typo — I would
say you have too much faith in government.) Now, while politicians,
and federal politicians in particular, may love to extend their
own power (with one notable exception — Dr. Ron Paul), they are
not stupid. The increase in taxes on cigars would be a part of a
bill to renew the State Children's Health Insurance Program. Now,
if that isn't a brilliant stroke, I don't know what is!

After
all, who could possibly be against giving health care to poor, uninsured
children? Well, of course, those heartless libertarians, but who
else? Besides, the program already exists, it just needs to be reauthorized.
What would we tell those children who would be cut out of the program?
Even those otherwise inclined against socialized health care, it
seems, could be easily turned against their own instincts.

A
large
number of organizations
have come out in support of the reauthorization
of this program. The linked story includes this telling line: "The
American Medical Association could use an increase in federal tobacco
tax for funding the SCHIP program." Well then, who could say
no to the AMA? The saddest inclusions on that list are surely all
those Catholic organizations. The fact that the Church and its adherents
worked so hard to set up so many hospitals in Medieval Europe aimed
at providing health care to the poor was, to me, always one of the
greatest testaments to its benevolence and fidelity to Christ's
teachings (see Thomas E. Wood's excellent How
the Catholic Church Built Western Civilization
). Now, however,
Catholic Charities receives two-thirds of its annual budget from
government grants and such. They're on the government dole and they
like it. It seems that charitable health care can only be provided
with assistance from the state. One might say it's a shame that
so few people contribute to charity that so much money must come
from the government. But, honestly, why would anyone donate when
they know their taxes already do that for them (as Charles Murray
would tell us)?

Jacob
Sullum over at Reason
has already looked at who the increased
tobacco tax will actually hurt and who SCHIP would actually help,
so I won't deal with that. There are several other observations
that I'd like to make.

First,
poorer cigar smokers would no longer be able to afford cigars. By
"poorer" I mean all non-fat cats. The Excalibur I mentioned
earlier would cost me around $15 with the proposed tax. In my four
years of smoking, I dished that much out for a stick maybe two or
three times. They were big occasions. At Jon's Pipe Shop, the majority
of people buying cigars in there are college students, both undergrads
and graduate students. I highly doubt they can absorb a $10 increase
per cigar. I know I can't. I'm sure some smokers better off
than myself can continue to enjoy cigars, including whatever cigar
smokers there are in the federal legislature.

Cigars taste great and are a great way to relax, but I don't need
cigars. But what does it matter if cigars are a necessity or not?
Imagine if politicians tried to tax some other non-essential, yet
enjoyable (to some), product, such as fast food. I don't think McDonald's,
Wendy's, Burger King, or their consumers would take kindly to $10
cheeseburgers. But given our culture's current hyperventilation
over obesity it would seem to me just as appropriate as a tobacco
tax. But as Sullum said in his column, "everybody hates smokers."
Too true. It's the modern sin, and we smokers are desperately in
need of repentance. But politicians don't want to eradicate those
sinners whose weakness is cigarettes, given that there are so many
of them and they are such a cash cow. But the cigar industry is
a relatively small one in the world of American tobacco, so targeting
them is easy. Maybe, if the politicians are lucky, all those former
cigar smokers will make a mass exodus to cigarettes (ha!).

Finally,
perhaps the craziest thing about the whole situation is that Bush
may veto
the reauthorization if it makes it to his desk. Our
"conservative" president's love affair with big government
is well-documented.
But on this issue he has said that reauthorization would amount
to a "massive expansion of the federal role" in health
care. Well, that's certainly a refreshing sentiment to hear from
him, and I'd love to be able to continue smoking my cigars, but
I'll believe it when I see it. Until then, I'll enjoy my cigars
while I still can.

July
28, 2007

John
Ostrowski [send him mail]
is a graduate student in political science at the University of
Illinois at Urbana-Champaign. Visit his
blog.

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